A Company Has Two Products: a and B

question 160

Multiple Choice

A company has two products: A and B. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools: Annual production and sales level of Product A is 34,300 units, and the annual production and sales level of Product B is 69,550 units. What is the approximate overhead cost per unit of Product B under activity-based costing?

• A) $3.00
• B) $2.00
• C) $10.28
• D) $15.00
• E) $2.33

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Definitions:

Profitability

The state of yielding financial gain or profit from business activities.

Organizational Effectiveness

The degree to which an organization achieves its goals and objectives through the efficient use of resources.

Span of Control

The number of subordinates a manager or supervisor can effectively manage and control.

Administrative Costs

Expenses associated with daily operations of managing a business or organization, including office supplies, salaries of non-production staff, and utilities.